Memorandum submitted by Chartered Institute
of Patent Agents
The Chartered Institute of Patent Agents ("CIPA")
was founded in 1882 and received its Royal Charter in 1891. CIPA
represents the interests of Fellows and Associate Members engaged
in the establishment and exploitation of patents, trade marks
and design rights. CIPA represents members employed by a cross
section of industrial firms (working as patent or trade mark managers),
private practice (as patent or trade mark agents) and the legal
profession (in specialist IP practices). Our members represent
persons and firms engaged in industry and commerce, whether small,
medium or large enterprises, in the UK and elsewhere.
CIPA has recently made submissions on behalf
of its members at, inter alia, discussions on the European
Commission Green Paper on Combating Counterfeiting COM (98) 569
15 1098 and to the House of Lords committee considering the 1998
Competition Bill. CIPA is represented on the Standing Advisory
Committee on Industrial Property ("SACIP") and took
part in discussions on trade mark owners' rights to control parallel
imports at the 45th meeting of SACIP on 1st February 1999.
CIPA is very pleased to be asked to assist in
the present Inquiry and the following submissions are in the order
of questions raised in Press Notice PN6 98/99.
Question 1 "Why does "grey"
and parallel trading occur?"
CIPA believes that "grey" and parallel
trading derives from decisions taken by brand owners as to where
and how they sell, and for how much they sell their products or
services. It is the right of a brand owner to sell under the brand
products of different qualities according to the brand owner's
judgement of market conditions. The question is whether brand
owners have any right to dictate resale. It clearly lies in the
economic risk sphere of a brand owner, for example, to sell last
season's stock in an Eastern European country. (This was the matter
decided in the Silhouette case, Silhouette International
Schmied GmbH & Co KG versus Hartlauer Handelsgesellschaft
mbH; ECJ case C-355/96). Where differential pricing of standard
stock is encouraged by the brand owners, "grey" and
parallel trading will occur.
Question 2 "What are the costs and benefits
to producers and consumers?"
CIPA believes that the costs of "grey"
and parallel trading to producers has been well documented by
submissions from organisations such as the British Brands Group
and AIM. However, CIPA would note that the interests of importers
and distributors also have an entitlement to be considered. It
is a legitimate economic activity to turn a profit by buying in
the cheapest market and selling in the dearest. The growth of
electronic trans-national commerce should also be considered in
this context. It is now possible to dial up a US retailer of clothing
on the Internet and purchase branded products (from the UK) at
considerably cheaper cost than purchasing the same products in
the High Street.
The main benefits to consumers lie in the availability
of cheap products. It has been suggested by some interests that
consumers do not receive the same level of service and after-sales
support from, for example, supermarkets who sell batches of televisions.
However, against this may be stated the view that consumers are
now increasingly sophisticated and capable of differentiating
between levels of service as well as levels or price.
Question 3 "Where does the public interest
lie in respect of such trading?"
CIPA wish to remain neutral on this question
because its members cover the whole range of industry from multi-national
to importers to SME's and individuals.
Question 4 "Should more or less protection
be give to brands?"
CIPA understands this question to refer to the
protection of "get up", and believes the question to
be prompted by concern about "look alike" branding.
CIPA did not support efforts by some interests
to provide additional protection for brand owners in the 1998
Competition Bill. CIPA believes that the terms "get up"
and "brands" are insufficiently precise to warrant additional
protection, and such further indefinite protection as was suggested
in the 1998 Competition Bill would actively disadvantage persons
wishing to search the state of the Register in order to know whether
they are clear to adopt a particular trade mark. Where sufficiently
distinctive in fact, aspects of get up such as colour or packaging
may be protected under the Trade Marks Act of 1994 (see below)
as may shapes of containers. The law of passing off provides brand
owners with additional remedies, for example the recent case of
United Biscuits (UK) Ltd versus Asda Stores Ltd (1997)
(PENGUIN/PUFFIN). CIPA does not believe further legislation in
this area is warranted at the moment. There is such a thing as
"fair following", and CIPA recognises that interest
of manufacturers seeking to break into established markets are
also worthy of support. Manufacturers suffering particular problems
with certain supermarket chains imitating their get up are at
liberty not to supply them.
Question 5 "Are trade marks insufficiently
or excessively protected?"
The provisions in the Trade Marks Act 1994 give
the potential for realistic trade mark protection, removing some
of the anomalies and out-dated thinking of previous legislation.
Protection for a trade mark has always extended to marks similar
to the sign which is registered, as well as the identical mark.
Under the Act, protection now extends to similar goods or services,
as well as those listed in the registration, where there is a
likelihood of consumer deception and/or confusion. As noted in
the submission to question 4, colour, shape and packaging may
now be protected where sufficiently distinctive; ie where the
trade mark owner has done enough, either by the nature or the
mark adopted or by the use made of it, to distinguish his mark
from those of his competitors and from those normal descriptive
words wanted in his trade.
Question 6 "What area the main problems
with existing measures to detect and prevent counterfeiting and
CIPA attaches its submission to the European
Commission Green Paper on Combating Counterfeiting in response
to this question.
Question 7 "How can such measures be
made more effective?"
CIPA refers to its submissions made in response
to question 6. In a UK context, CIPA strongly supports and commends
the work of the local Trading Standards Officers concerned with
combating counterfeiting. Trading Standards Officers are given
wide responsibilities under Section 93 of the Trade Marks Act
1994, and CIPA would like to see this important work receive wider
recognition and funding.
Question 8 "Are there problems with definitions?"
CIPA does not believe so. CIPA supports the
definitions used for "counterfeiting" and "piracy"
by the Anti-Counterfeiting Group. As noted in response to question
5, CIPA does not believe the terms "brand" and "get
up" to be capable of precise defintion.
Question 9 "How can Intellectual Property
Rights be more effectively agreed and enforced internationally?"
This is a broad question, in part answered by
submissions made to question 6. On the question of "international"
versus "EC" exhaustion of rights, CIPA notes that the
English courts have historically favoured international exhaustion
in cases such as Colgate Palmolive Ltd and Another versus Markwell
Finance Ltd and Another (1989) RPC 497 C.A. CIPA further notes
that the position before the European Court of Justice is currently
fluid, with various cases on the issue of international versus
EC-wide exhaustion in the Referral process or awaiting Referral.
CIPA supports the proposition that the existing provisions of
the Agreement on Trade Related Aspects of Intellectual Property
("TRIPS") agreed at the Uruguay Round should be implemented
before reopening discussions of such issues at the next round
of international trade talks.
29 March 1999
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